Final answer:
The secondary mortgage market is where loans originated in the primary market are sold to other banks or financial institutions. The value of these loans is influenced by factors such as the riskiness of the loan and prevailing interest rates in the economy. Option a
Step-by-step explanation:
The secondary mortgage market is best described by the statement that it is where loans originated in the primary market are sold. This includes loans like mortgage loans that a family might take for purchasing a house.
The primary mortgage market is where financial institutions make loans to borrowers, while the secondary mortgage market allows these loans to be purchased by other banks or financial institutions, who then take over the collection of loan payments.
One key factor affecting the price at which loans are sold in the secondary mortgage market is the perceived riskiness of the loan. Financial institutions consider the borrower's ability to repay and the current economic conditions. They also compare the interest rates—if a loan has a lower interest rate relative to current market rates, it is valued lower, and if it requires a higher rate, it is valued higher.
This liquidity provided in the secondary market and the ability to assess and price loans based on risk and interest rates make it a crucial part of the financial system. Option a